tv Nightly Business Report PBS July 1, 2014 6:30pm-7:01pm PDT
this is "nightly business report" with tyler mathisen and susie gharib. >> early fireworks, the dow pushes towards 17,000 on the first day of the trading of the second half. with that milestone, what will the rest of the year bring? >> defying predictions, people flocked and drove off with more vehicles than expected despite the recalls. behind closed doors, a look inside the room where google is quiet ly trying to take on twitter. that and more tonight on "nightly business report" for this tuesday, july 1st. >> i'm susie gharib. >> i'm bill griffeth in for tyler mathisen again this week. wall street kicked off with a bang, a record-breaking session that saw the dow come within a couple points of
17,000. the blue chip average, a and p and dow transports closed at historic highs on the heels of strong manufacturing activity data both in the u.s. and in china. the rally was led by gains in health care, technology and consumer discretionary stocks that lagged recently. here is how the major averages ended with dow up 129 points making the biggest gain since may 21st and came within two points of the 17,000 mark around midday before giving up early gains. the nasdaq was the strongest of the major averages up 50 points, reaching a fresh 14-year high and the s&p was up 13 notching its 23rd record close of the year. so with the dow at 17,000 now in the cross hairs and the markets at new highs at the mid point of this year, a lot of traders are thinking about redoing portfolios looking to maximize profits ahead of the second half of the year. dominic chu has more.
>> reporter: many traders are taking advantage of this half time to make adjustments to portfolios. certain parts of the stock market fueled the ride, especially in the second half of each year. since 2009, the best performing second half sector each year has been consumer discretionary. it's been up an average of 16% during the last six months of each year. part of the reason might be the increased spotlight these stocks get because of the holiday shopping season. it's no wonder they are the biggest laggers in the s&p 500 this year. for the worst performing sector, over the last five years it's been utilities, up only an average of 5%. iran no ironically they are the best stocks in the s&p 500 this year. knowing the past doesn't always help predict the future. some are looking for profits elsewhere. >> the energy sector is the
sector investors should focus on first half of the year it clearly had low expectations but the reality of pure performance, the energy sector is one of the best performing sectors. >> reporter: and it's not always about what you're buying but also what to avoid. >> we believe a lot of sectors that have been pushed higher by lower interest rates will see subpar returns during the second half of the year. recent utility haves done well and we would continue to look at the asset classes. >> reporter: many traders were looking for fewer gains this time around. but with stocks making fresh record highs and the s&p 500 up 7% so far this year, reassessing your second half playbook might be the prudent course of action. for "nightly business report", i'm dominic chu. >> joining us to talk more about this big trading day and your investment strategy, patricia edwards, managing director at
u.s. bank wealth management. what a day. a lot of people tuning in are wondering what happened all of a sudden. the stock market has been going up slowly, slowly, the big rally, talk of 17,000. what would you say? happene happene happened? what changed? >> fireworks are nice this week but beyond that, it's the beginning of a fresh quarter. you got retirement plans making contributions, for the month or for the quarter. that starts to push things higher. we have economic data that is coming in that is just a little better each time. it's not anything earth shattering but continuing to build confidence and on top of that, what you saw in the rally is you saw things rally that we have not seen rally over the past quarter. >> right. >> so small caps, things like that so you've seen, i think, a lot of mutual funds that they have to report as of june 30th what they are holding. they can rejigger for
performance. >> yes, that was interesting, patty. the defensive stocks for the most part led the way for the second quarter. i don't want to say save haven plays but cautious plays that paid dividends that people run to when they are not sure growth will be that strong. that wasn't the case today. a lot of laggers were leaders today. do you think that will be the theme for this quarter? >> well, the theme for this quarter is really going to be completely data dependant we think. if the earnings are there, then i think you're going to start to see a little more growth. you're going to start to see purchasing not only in the energy sector, which we like, but also things like manufacturing because energy costs should be coming down rather than up with the natural gas that we've got coming in to the pools here. so there is a lot of things that could start to go well and will drive the entire economy rather than just the stock market. >> patty, are you concerned that we haven't had a serious
correction in a long, long time? a lot of market strategists say it's healthy to have a correction and we haven't had one. should we be concerned about that? >> you know, it is healthy to have market correction and healthy to look where you're trading versus earnings and what performance you have. i'll have clients that will say geez, we're up 180% or so off of the bottom in 2009. you know, shouldn't we be selling equities? we look at it and if you graph the equities versus the earnings that those companies have had, we're just barely slightly over valued. we're a little more cautious because we are over valued but by no means in record territory and on top of that, we have companies that have a boat load of cash. we're back at levs we haven't seen since the 19 60s. we'll see dividends, stock buy back and mergers and acquisition. >> we're taking note of the dow at 17,000.
it's a benchmark that we need to keep an eye on. tokenolo technology stocks, the nasdaq up 6% in the second quarter and the dow was up 2%. today it was up 50%. the dow was up less than 1%. do you like technology here? >> we do like technology. part of the reason is that these companies throughout the market, actually, are going to have to continue grow earnings. part of the way you grow them is spend on technology, get greater productivity out of the people there and then you start to add head count. we think that's actually been going on for awhile but there is more to come. >> we would like to get your thoughts on what individual investors should do. a lot have been sitting out. they are sitting on a lot of cash. is it too late to get in at this point? is it ever too late? >> well, frankly, i think for a well allocated portfolio, it's never too late. that being said, you need to
take into consideration a few things. in terms of world equity, the u.s. is 48% of world equity. 52% of the equities, stocks, that trade in this world aren't here. so if you don't have exposure to international, both developed international markets as well as emerging markets, you might want to start to look at that. if you're trading in the u.s., you might want to start looking more toward the small caps and the mid cap stocks because if there is going to be mna, they will be the folks that will take out. >> joining the conversation right now is jonathan gallub, chief u.s. market strategist. thanks for joining us, jonathan. do you see this continuing? is this kind of trading that we saw today, this rally, could this set the tone for the third quarter or do you see us going into the summer rooms as sometimes happens? >> you know, a day where the market is up between a half and
1%, you want to be careful to not project that that's what we're going to see. i think we'll see a continued very strong run in the market, very similar to what we had in the last several months. the key is, a lot of this is driven by better economic news and corporate profits. >> what about what patty was talking about, ipos? do you see that theme continuing? we have a big i prks orksipo al >> no, it's not driven by corporate excitement about the economy as much as moving businesses offshore and doing things to enhance the earnings by cutting some of these tax burdens, but the reality is is that we have an economy, which is on solid footing, getting better and that really is the fuel for the market.
>> all right. terrific. jonathan, thank you so much. jonathan from rbc capital markets and patricia edwards. thanks to both of you. it was another sign of strengthening u.s. economy when auto sales for june were released today and defied predictions of a slowdown in consumer spending and instead, saw sales accelerate to an annualized pace of 17 million units sold. ford sales did fall last month that sent the stock lower today but otherwise shares of other auto makers saw modest gains on wall street. phil la beau has more on june's surprisingly strong sales and which auto maker stood out. >> reporter: a surprising day for auto makers with june sales better than expected. you can credit that to a relatively healthy economy and demand for new vehicles. take a look at the big three. of these numbers, the one that stands out here, general motors. sales increased 1% last month, many were expecting sales to
drop 8.5%. chrysler another strong month. this brand is on a role. jeep in particular is red hot up 28% last month. for general motors, we mentioned how sales were up last month, that's despite the fact the auto maker is recalling 28.96 million vehicles worldwide and 20 million announced last month. june sales up 1%. that's a reason the auto stocks got a bit of a bounce today as many look at the industry and saying if june sales pace is on par with a strong may, what can we expect the rest of this year? we'll have to wait and see. that's the story regarding june auto sales, phil lebeau. general motors isn't the only auto maker plagued by defective ignition switches. chrysler is expanding its own recall. it's calling back another 700,000 vehicles that have ignition switches that can be
shut off. this includes older models of previously recalled dodge caravan and chrysler town and country mini vans as well as the dodge journey cross over vehicles from the years 2008 and 2009. talks are still on going continuing past various deadlines as negotiators look to seal the deal on a contract at those 29 ports along the west coast. a new six-year deal would cover 20,000 dock workers from california to washington state including los angeles, long beach and seattle tacoma. the threat of west coast ports shutting down isn't the nation's only transportation crisis. the white house is warning gridlock in congress will lead too gridlock on the roadways if auto makers can't agree to pay on highway and transit repair program. president obama warned unless money is found, hundreds of thousands of jobs could be lost. >> if this congress does not act by the end of the summer, the
highway trust fund will run out. won't be any money there. all told, nearly 700,000 jobs could be at risk next year. that would be like congress threatening to lay off the entire population of denver or seattle or boston. >> u.s. transportation secretary anthony fox says states will begin feeling the pain of cut backs in the highway programs as early as the first week in august. still ahead, google's latest expert the how it's trying to take on twitter with the world cup and the war room. we'll explain.
southwest airlines is cleared for international take off and that's where we begin tonight's market focus. the carrier is launching flights to december nates outside the u.s. for the first time ever. new destinations will be jamaica, bahamas and aruba but will expand to other locations over the next few months. they are taking over routes by airtran airways bought in 2011 and plans to eliminate by the end of the year. the stock rose more than 3% to $27.73. t-mobile has been accused for adding bogus charges on customer's accounts without consent. the federal trade commission says the wireless carrier tacked fees on to customer bills totals hundreds of millions of dollars labeling them as third party changes. the ceo says the complaint is unfounded. shares fell to $33.41. shares of regeneron will
increase the stake to 22.5%. the move is part of an agreement between the companies allowing it to buy. regeneron rose to $303 and change making it the best performing today. the second best performer in the s&p, netflix, shares is were higher on an analyst upgrade 679 golden sacks rates it a buy up from neutral. the video streaming company's international expansion and increasing profit margins as customer base grows larger. the stock jumped more than 7% to $473.10. hormel foods is buying the maker of muscle milk. it's in effort for the spam maker to expand outside of the meat products and diversify offerings into protein drinks. shares fell to $49.19 today. aerospace and lockheed martin is
freezing the current pension plan and transitioning employees to a defined contribution plan. that plan will go into effect in 2016 to help the company manage the long-term cost of its retirement programs. shares of lockheed martin down a fraction today just above $160 per share. and twitter has a new chief financial officer. the social media company tabbed a former gold man sack's executive instrumental in helping goldman win the role on twitter's ipo last fall. shares were up 2.5% to close at $42 and a nickel. google did some shopping today buying a streaming music service with 5.5 million users, all 40 of the employees will be joining the search giant but no word on the price tag. world cup play continued with the u.s. taking on belgium but there is another big rivalry taking place between google and twitter over which company can provide users and advertisers
with the best real-time trending. the information during world cup matches and he veevents has bee sticking point and josh lipton has more. >> usa! >> reporter: soccer fans gathered today in bars, homes and officers to cheer on their teams in the world cup. the loss in san francisco, a group of google employees were watching the game, only they were watching for work. >> if the u.s. cannot stop talking -- >> reporter: welcome to google's world cup war room. fans all over the world use google to search for information during the world cup. so far google says there have been 1.5 billion searches. >> in 2010 there was more interest in the world cup, super
bowl and more. other big sporting events generally are in the hundreds of millions. >> reporter: a group of googlers meet in this office every day during the world cup to mine the searches for information. data analysts first identified the most popular topics and shared on social media and with broadcasters like espn. >> google is part of this conversation on the world cup not just for the first time but a new way. >> reporter: for example, as colombia made it into the quart finals, james rodriguez became the most searched for player on the planet, so the google team produced this info graphic to showcase that trend. financial analysts who cover google say that the search giant is taking on twitter with the project. twitter breaks down millions of tweets for trends and information that can be useful for advertisers. google is trying to show advertisers that it can be every
bit as capable as twitter when providing real-time events. like the super bowl and oscars, but the company said it never conducted one on this global scale. at the end of the day, it's about generating more advertising dollars for google. neil of crt capital says google is trying to prove there are vast amounts of data not fully being utilized. if google can present interesting ways of pack caking the data, that can be compelling to advertisers. now we'll wait and see whether advertisers are impressed by realtime snapshots of what fans are thinking as players take the field to battle for that world cup trophy. josh lipton, nig"nightly busine repor report", san francisco. well, coming up, it's general motors versus toyota, two of the most recognizable brands competing in countries
across the globe and tonight, the two go head-to-head in nbr's ultimate stock cup. the world cup as you may know is in the knockout round hoping to reaching quarterfinals and nbr's ultimate stock cup, we put the world's two largest auto makers head-to-head to see what comes out on top. the u.s. general motors and japan's toyota. general motors, gm, the world leader in auto sales every year from 1931 to 2007 founded in 1908. gm is headquarters in detroit.
2013 revenue more than $155 billion. and the list of past and present gm brands is a who is who of american automobile history. icons like buick, olds mobile, cadillac, pontiac, gmc and chevrolet and it almost came to an end with a bankruptcy filing in 2009 but gm was bailed out by the federal government. and last year it sold more than 9.7 million automobiles trailing only toyota, which sold more than 9.9 million. but gm out sales toyota in china and the united states, the two largest markets. japan's biggest company market cap was founded in 1937 and head quartered in japan's toyota city. 30 2013 revenue more than $222 billion. the toyota flag ship camera sedan is the best selling car in
the united states for 15 of the past 16 years. also notable, the toyota prius became the world's first mass produced hybrid in 1997. other brands are scion and lexus. >> well, let's turn now to our guest to weigh in. he favors toyota and with snp capital iq. why gm over toyota. >> we don't differentiate over two we have a strong buy on but if you take the march can tket the edge is toyota, which has 30% upside versus 28% for general motors. so that's pretty close. both companies are benefitting from rising global demand. it's a favorable industry trend. you have a lot of emerging market. people are buying cars for the first time and back home in
ameri america, a rising market with a strong economy. new features, technology and the average age of a vehicle is over 11 years old. you have people coming into the dealership to buy cars and that helps both. >> no question, the gm recalls have been a disaster for that company from a public relations standpoint. do you think it dents sales, tarnish the brand? do you think about that what you compare to toyota here? >> sure, it's something you don't want to have. it's something that weighs on the brand image to certain extend, but we don't think that it will make a major difference in terms of the company's sales, which is something we've seen in the past two months for may and june where sales were pretty good. the reason we think this is because recall is a part of doing business in the automobile industry. you're going to always have recall. some will be smaller. some will be larger. you want to keep it as the headlines. if you have a situation where people are dying from it like
the ignition recall, that's going to hurt mostly people who have been involved with accidents and know the people but overall, they are a broad enough brand they can be disciplined and people will stick with them and expect them to do better. >> you say that the auto industry always has recalls but in this case of toyota and general motors, they both had or are going through a high-profile credibility issue with recalls. when you look at it from a crisis management point of view and how these two companies handled it in the past and gm currently, who is doing a better job? >> i'd say the edge for this goes towards general motors. in part, they learned a little from toyota's experience. toyota had a problem they were not acknowledging once the news was out and did a bad job with their public relations. gm, this is old news that should have been disclosed a long time ago but once out, they went to the forefront, had the advantage of a new ceo not involved and she is showing that this is a
new gm, not the old gm, this is not going to be stood for in the future. >> very quickly, alternative fuel sources, do you give toyota points because of the prius hybrid that reached mass appeal? do you think? >> absolutely. toyota has an advantage. the number one selling vehicle, if you're buying one, you're most likely going to buy a hybrid, i mean, a prius. there are other choices but they are number one in the mind set of a customer. >> thank you so much for joining us. and so you just heard what our guest thinks. now we want to hear from you, which stock do you prefer? general motors or toyota. go vote on nbr.com. the results from last week's global rivals challenge where we asked you to choose between general electric and seamons of germany. you picked ge.
64% of you voting for the u.s. based company. >> i think so far, there have been mostly votes for the u.s. companies. do you think there is a bias there? >> i wonder why. good job. >> that's "nightly business report" for tonight. thanks for watching. >> i'm bill griffeth. have a great evening. we'll see you tomorrow.
tonight on revolutioners: >> i was the paper boy in palo alto where steve jobs used to live, and larry page lives today. that was the beginning of my journalism career. ♪ [ music ] ♪ >> steven levy of wired magazine, facebook author david patrick, and pulitzer prize winner john markof have seen it off. here they talk candidly about everything they've seen at the revolution. >> this evening is a little bit of a retrospect itch,